Voluntary Repayment Lifetime Mortgage

Do You Want an Equity Release With a Voluntary Repayment Option? Here's How to Protect Your Legacy

Contributors: Nicola Date, Katherine Read. Reviewed by Francis Hui

Your Comprehensive Guide to a Voluntary Repayment Lifetime Mortgage. Here's Everything You Need to Know About How it Works and Which Option is Best ....

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What’s a Voluntary Repayment Lifetime Mortgage?

A Complete Guide to Voluntary Repayment Lifetime Mortgages in Dec 2021

Would you like to discover the world of voluntary repayment lifetime mortages?

Look no further!

After careful considerations, unbiased professional advice, and by checking out this lifetime mortgage manual, you will finally understand what are the pros and cons of choosing this plan in Dec 2021.

Let’s take a look.

What's Voluntary Repayment Lifetime Mortgages

What’s Voluntary Repayment Lifetime Mortgage?

A voluntary repayment lifetime mortgage is a type of equity release that allows you to reduce what’s owed at the end of the loan by paying back some of the interest and loan, when you have the means to do so.

How Does an Optional Partial Repayment Plan Work

How Does an Optional Partial Repayment Plan Work?

With a voluntary repayment lifetime mortgage, you have the option to reduce the final loan amount, and the interest from compounding, by settling some of the amount when you have the means to do so. It’s available for homeowners over 55, with a property value that’s minimum £70,000. Like with all types of lifetime mortgages, the loan and interest balance is repaid when you pass away or enter long-term care.

The Benefits to Taking Out Voluntary Repayment Plans

What Are the Benefits of a Voluntary Repayment Lifetime Mortgage?

The main benefit of a voluntary repayment lifetime mortgage is that you reduce the amount of equity that’s owed from the sale of your home when you pass away or enter long-term care, and by paying interest, you prevent the amount from compounding.

Here’s further benefits:

  • You don’t have to provide proof of income to qualify.
  • The optional partial payment plans is made at the discretion of the proprietor, and you achieve this without any administrative fees or penalties.
  • You can decide to make payments following consultations with your lender to ensure that the maximum limit’s not breached .
  • You transfer the funds by cheque, debit card, online bank transfers, or even a standing order depending on your plans broker.

Repayment Strategies: All the Options

With regular changes occurring in the equity release docket and alterations made in how you can manage your future equity release balance, most brokers4  are initiating several repayment strategies. They include:

#1. Making Interest-Only Repayments

With an interest-only plan, you can effectively maintain a level balance of your loan, thus safeguarding the equity value in your estate and any inheritance you wish to pass on to your beneficiaries.

#2. Utilising the Maximum Repayment Allowance

This allows you to repay not only the interest but also a factor of the equity too. If your lender allows, you get to go for the 15% voluntary repayment strategy, and get to repay the whole balance within 8-9 years!

#3. Making Purely Random Repayments

When you have some capital and consider using these plans to sort the balance, it helps in slowing down the accumulation of the interest charge.5  However, the balance can still increase with time.

The fantastic thing about these optional partial repayment schemes is that you aren’t mandated to make any monthly repayments, and they can be efficiently switched ‘on or off’ as you wish.

Therefore, if this plan is for you and you want to see how much you can release, be sure to use our voluntary repayment estimator to get an idea of how ad hoc repayments could work for you.

The Voluntary Repayment Plan Approaches

How Much Can You Borrow?

The amount you can borrow with a voluntary repayment lifetime mortgage will depend on your age, your property value, and sometimes the condition. Further criteria may include the annual interest rate and the yearly repayment plan you choose.

Here are the best rates for a lifetime mortgage as of Dec 2021!

In Conclusion

The voluntary repayment plan comes in handy when you are looking to get financial freedom and continue owning 100% of your asset.

It’s time to enjoy your retirement.

If you need more information on lifetime mortgage plans though, be sure to click here and see how much equity you can release and chat with an expert.

Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
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Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.
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Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
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Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.
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Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

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